Advance Tax
Income tax paid in installments during the financial year itself, rather than as one lump sum after it ends, whenever your total tax liability for the year exceeds ₹10,000.
Advance tax is income tax paid in installments across the financial year, based on income you earn and estimate as you go, rather than a single payment after the year closes. It applies to anyone whose total tax liability for the year, after TDS, is expected to exceed ₹10,000, which in practice covers most people with business income, capital gains, rental income, or interest income beyond what their employer's TDS already covers.
For most taxpayers, the due dates fall on 15 June, 15 September, 15 December, and 15 March, with cumulative payment percentages of 15%, 45%, 75%, and 100% of the estimated annual liability by each date. Taxpayers who opt for presumptive taxation under Section 44AD or 44ADA can instead pay their entire advance tax in a single installment by 15 March.
Missing an installment or underpaying attracts interest under Sections 234B and 234C, calculated monthly, so the practical habit worth building is estimating your likely annual income each quarter rather than waiting until March and facing a larger interest bill on the shortfall.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.